Can I Be Fired If I File for Bankruptcy?

We often have clients who are terrified that if they file for bankruptcy they will be fired once their employer finds out about it.  Sometimes they tell us that the reason they have not filed already is the fear of losing their jobs.  We also have clients ask about their prospective ability to get a job if they file for bankruptcy.

Section 525 of the Bankruptcy Code provides that private employers may not terminate or discriminate against any person with respect to employment because that person filed for bankruptcy. 

However, the statute does not prohibit a private employer from refusing to hire someone who has filed for bankruptcy in the past, and various courts have upheld the employer's right to refuse to hire someone with a bankruptcy in his or her past.

If you are a government employee or looking for a position with a government agency, the statute makes it illegal for a governmental unit to:

Deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.

Thus, if you are applying for a state or federal job, you cannot be discriminated against if you have a bankruptcy filing in your past, or if you are currently considering filing for bankruptcy.